Hedge Fund Intelligence Hedge Fund Intelligence - China | Page 18

CHINA 2013 ASSET MANAGEMENT

ASSET MANAGEMENT CHINA 2013

Creating a more mature and deeper marketplace

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China’s economic growth in recent years has not translated into good returns for passive equity investors. But a series of major reforms to the securities and investment industries are paving the way for more active asset management in the country. And a gradual maturing of the market to encompass a wider range of asset classes and investment strategies that are available to onshore and foreign investors should also create new opportunities for hedge fund managers
or the best part of a decade, China has been no place to be a long-only equity index follower. The Shanghai Composite Index has lost about 40% of its value since its August 2009 peak – wiping out almost $650 billion of market capitalisation and making it the worst performing major market in the world, bar Greece. That has left Chinese stocks looking pitifully undervalued by global standards. They are now trading on single-digit P/E ratios and price-book value (PBV) ratios of a little over one. At these levels, say some investors, China is looking irrationally cheap. Others say there are good reasons why Chinese stocks find themselves in the bargain basement of global equity markets today. Foremost among these is that the CSI-300 index remains dominated by state-owned companies (SOEs), which has deterred some managers from making any onshore allocations. Fall in Shanghai “Currently we don’t have an allocation to A-shares in Composite Index from any of our portfolios,” says Tony Hsu, head of Dalton peak in August 2009 Investments’ Shanghai office and co-manager of the firm’s Pan-Asian and Greater China equity funds. “The A-share market is composed predominantly of SOEs whose senior executives tend to be either former politicians or have political ties and h ????????????????????????????????????????????t?!???????qQ????????????????M=????????????????????????????????????????????????????????????????????????????????????????????????????????????????????Q???????????????????????????????????????????????????????????????????????????????????????????????????t?Q?????????????????????????????????????????????????????????????????????????????!??????????????????????M=?????????????????????????????????????????????????????????????q ?????????????????????????????????????????????
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